[quote=BondGuy]The muni market is a train wreck. Huge hedge funds continue to unwind creating the best buying opportunity for investors in decades.

  Usually the big institutions make money while the little guy gets screwed. In today's muni market the little guy gets to make money while the big institutions take it on the chin. How many times have we seen that happen?   In times past when doing equivalent yield calculations the munis only came out better when figuring in the tax benefit. Today, the one through five year treasuries yield less on face amount than do their counterpart AAA munis. The 30 year treasury yield is equal to the 30 year AAA muni at a 4.60%. That's better than a 7% TEY for those in the 35% tax bracket!        [/quote]     I agree with you BondGuy.  With the failure of the auction for auction rate securities, the hedge funds and institutions have had to sell the only thing they could sell to raise money...municipal bonds.  The bond insurers have also, unjustly in my opinion, knocked down munis, but really municipal bond insurance is redundant since the default rate on munis is historically extremely low.  There is a reason why many bond managers are now buying munis...they are seeing great value in an unfairly hit market.    Unfortunately, it's not really a market I like to go after, but for those that do, there is good money to be made.

The opportunities I'm seeing in the muni bond market are pretty good. But there's one caveat I see and practice for myself and clients: I'm only adding to any positions thru muni funds.

Why? To make a commission! (just kidding!)  The reason is that I don't have time or the acquired skills to analyze the individual bonds. Why not just buy AAA-rated? Because the auction market chaos has put several municipalities into a bind. For example, Birmingham, AL (which had a decent rating) is floating the idea of bankruptcy to get out from under the onerous obligations the auction market chaos is forcing on them. Municipalities with "auction market exposure" are almost similar to corporations having "off-balance sheet" obligations that eventually come back to bite-em. Therefore, you could be buying a highly-rated bond, but if the auction market chaos continues and that particular municipality has some exposure to it, you could be facing the same problem.     Although I'm not a big fan of bond funds, I'm more inclined to let specialists select and choose those bonds, given the climate of the market.

no idea:

Dobe, which bond funds are you considering?

  I'm reluctant to recommend any specific investments. Suffice it to say, since I'm in Georgia and most of my HNW clients are in Georgia, I use Georgia tax-free funds for the most part. (There aren't very many Georgia funds to choose from.) I prefer those funds with a track record that includes at least 2 interest rate peaks & valleys, a decent rating from Morningstar, little or no leverage, and an overall conservatively-rated bond portfolio.    No rocket science, just plain vanilla.